TransCanada will look to rail if controversial Keystone XL pipeline not approved

Jan 15, 2014
Rob Gillies, The Associated Press

TORONTO – The chief executive of TransCanada said Wednesday if the Obama administration doesn’t approve the controversial Keystone XL pipeline his company will look to the more dangerous alternative of building build rail terminals in Alberta and Oklahoma.

President Barack Obama is expected to decide early this year on Keystone XL, which is under review at the State Department. The long-delayed pipeline would carry oil from Canada to the Gulf Coast.

TransCanada CEO Russ Girling said pipelines are “by far a safer alternative” to oil trains but said if customers want him to build rail terminals he will. He said he’s in discussions with oil and rail companies.

Concerns have been raised about the increasing use of rail to transport oil throughout North America. A number of recent derailments have worried both officials and residents close to rail lines. In July, 47 people were killed in Lac-Megantic, Quebec, when a train with 72 oil tankers derailed and exploded in the small community. On Dec. 30, an oil train derailed and exploded in North Dakota, causing the evacuation of a nearby town but no injuries. Earlier this month, a train carrying oil and gas exploded in New Brunswick, also causing evacuations.

Girling said they’ll consider building a rail terminal in Hardisty, Alberta where the pipeline would have started. He said he will also consider building an import terminal in Cushing, Oklahoma, site of the biggest U.S. oil storage hub. The southern leg of Keystone XL from Cushing to refineries in the Gulf Coast is set to come online next week.

Obama initially refused to issue a permit for part of the entire Keystone XL project amid concerns about its potential impact on a large aquifer in Nebraska. The administration is considering another application, but TransCanada has received clearance for the pipeline’s southern leg.

The pipeline would carry 700,000 barrels of oil a day from Alberta across six U.S. states to the Texas Gulf Coast. Republicans, and business and labour groups, have long urged the Obama administration to approve the pipeline as a source of much-needed jobs and a step toward North American energy independence. Environmental groups have been pressuring Obama to reject the pipeline, saying it would carry “dirty oil” that contributes to global warming. They also worry about a spill.

Girling said opposition has helped delayed the process but said he’s confident Keystone XL will ultimately be approved.

Obama’s initial rejection of the pipeline went over badly in Canada, which relies on the U.S. for 97 per cent of its energy exports. Canadian Foreign Minister John Baird repeatedly called for a prompt decision on the Keystone XL pipeline during a trip to Washington on Wednesday.

“One politician — the president of the United States — can say yes to a great project to create jobs on both sides of the border, help with energy independence and energy security,” Baird told reporters.

“Decision time is upon us.”

The pipeline is critical to Canada, which needs infrastructure in place to export its growing oil sands production. The northern Alberta region has the world’s third largest oil reserves, with 170 billion barrels of proven reserves.